A BILL TO BE ENTITLED
AN ACT to adjust the additional tax rate on property coverage contracts to be revenue neutral based on an expansion of the tax base enacted in S.L. 2006‑196, to increase the distribution of the tax proceeds to the volunteer fire department fund, to amend the volunteer fire department grant program to allow more departments to qualify for grants, and to modify the distribution of tax proceeds to the local firemen's relief funds.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑228.5(d)(3), as amended by Section 3 of S.L. 2006‑196, reads as rewritten:
"(3)	(Effective for taxable years beginning on or after January 1, 2008) Additional Rate on Property Coverage Contracts. – An additional tax at the rate of seventy‑four hundredths percent (.74%) applies to gross premiums on insurance contracts for property coverage. The tax is imposed on ten percent (10%) of the gross premiums from insurance contracts for automobile physical damage coverage and on one hundred percent (100%) of the gross premiums from all other contracts for property coverage. Thirty percent (30%) of the net proceeds of this additional tax must be credited to the Volunteer Fire Department Fund established in Article 87 of Chapter 58 of the General Statutes. Twenty‑five percent (25%) of the net proceeds must be credited to the Department of Insurance for disbursement pursuant to G.S. 58‑84‑25. The remaining net proceeds must be credited to the General Fund.
The following definitions apply in this subdivision:
a.	Automobile physical damage. – The following lines of business identified by the NAIC: private passenger automobile physical damage and commercial automobile physical damage.
b.	Property coverage. – The following lines of business identified by the NAIC: fire, farm owners multiple peril, homeowners multiple peril, nonliability portion of commercial multiple peril, ocean marine, inland marine, earthquake, private passenger automobile physical damage, commercial automobile physical damage, aircraft, and boiler and machinery. The term also includes insurance contracts for wind damage.
c.	NAIC. – National Association of Insurance Commissioners."
SECTION 2.  G.S. 58‑84‑25, as amended by Section 7 of S.L. 2006‑196, reads as rewritten:
"§ 58‑84‑25.  (Effective January 1, 2008) Disbursement of funds by Insurance Commissioner.
(a)	Distribution. –  The Insurance Commissioner shall deduct the sum of three percent (3%) from the tax proceeds credited to the Department pursuant to G.S. 105‑228.5(d)(3) and pay the same over to the treasurer of the State Firemen's Association for general purposes. The Insurance Commissioner shall deduct the sum of two percent (2%) from the tax proceeds and retain the same in the budget of the Department of Insurance for the purpose of administering the disbursement of funds by the board of trustees in accordance with the provisions of G.S. 58‑84‑35. The Insurance Commissioner shall, pursuant to G.S. 58‑84‑50, credit the amount forfeited by nonmember fire districts to the North Carolina State Firemen's Association. The Insurance Commissioner shall pay the remaining tax proceeds to the treasurer of each fire district as provided in subsection (b) of this section.
(b)	Local Fire Districts. –  The Insurance Commissioner must distribute to the fire districts the amount each district received under this section in the previous year. If the amount distributable in a year is less than the amount distributed in the previous year, then the amount each fire district receives is reduced proportionally. If the amount distributable in a year is greater than the amount distributed in the previous year, then the excess proceeds must be distributed to the counties in proportion to the premiums collected on insurance contracts for property coverage in each county compared to the total premiums collected on insurance contracts for property coverage in this State. The county must distribute any funds it receives under this section to the fire districts in its county. The amount each fire district receives is its proportionate share based upon the property tax values in its district compared to the property tax values in all the fire districts of that county.
These funds shall be held by the treasurer as a separate and distinct fund. The fire district shall immediately pay the funds to the treasurer of the local board of trustees upon the treasurer's election and qualification, for the use of the board of trustees of the firemen's local relief fund in each fire district, which board shall be composed of five members, residents of the fire district as hereinafter provided for, to be used by it for the purposes provided in G.S. 58‑84‑35."
SECTION 3.  G.S. 58‑87‑1, as amended by Section 8 of S.L. 2006‑196, reads as rewritten:
"§ 58‑87‑1.  (Effective January 1, 2008) Volunteer Fire Department Fund.
(a)	Fund. – The Volunteer Fire Department Fund is created as an interest‑bearing, nonreverting fund in the Department to provide matching grants to volunteer fire departments to purchase equipment and make capital improvements. The Commissioner shall administer the Fund. Up to two percent (2%) of the Fund may be used for additional staff and resources to administer the Fund in each fiscal year.
(a1)	Grant Program. – An eligible fire department may apply to the Commissioner for a grant under this section. In awarding grants under this section, the Commissioner must, to the extent possible, select applicants from all parts of the State based upon need. The Commissioner must award the grants on May 15 of each year subject to the following limitations:
(1)	The size of a grant may not exceed thirty thousand dollars ($30,000).
(2)	The applicant shall match the grant on a dollar‑for‑dollar basis.
(3)	The grant may be used only for equipment purchases, payment of highway use taxes on those purchases, or capital expenditures necessary to provide fire protection services. 
(4)	An applicant may receive no more than one grant per fiscal year.
(b)	Eligible Fire Department. – A fire department is eligible for a grant under this section if it meets all of the conditions of this subsection. No fire department may be declared ineligible for a grant solely because it is classified as a municipal fire department.
(1)	It serves a response area of 12,000 or less in population. In making the population determination, the Department must use the most recent annual population estimates certified by the State Budget Officer.
(2)	It consists entirely of volunteer members, with the exception that the unit may have paid members to fill the equivalent of six full‑time paid positions.
(3)	It has been certified by the Department of Insurance.
(c)	Report. – The Commissioner must submit a written report to the General Assembly within 60 days after the grants have been made. This report must contain the amount of the grant and the name of the recipient."
SECTION 4.  Section 1 of this act is effective for taxable years beginning on or after January 1, 2008. The remainder of this act becomes effective January 1, 2008.